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New Medicaid Numbers

Friday, January 13th, 2012 Adam Roa

Medicaid Spousal Impoverishment Figures for 2012

The new minimum community spouse resource allowance (CSRA) is $22,728, and the new maximum CSRA is $113,640. The new maximum monthly maintenance needs allowance is $2,841. The minimum monthly maintenance needs allowance remains $1,838.75.  This has yet to be implemented for Maryland.  It is expected to come out shortly.  It is unclear if this will be retroactive to January 1, 2012.

In part, what this means is that the community spouse of a Medical Assistance applicant can have no more than $113,640 in countable assets at the point when she is seeking eligiblity for the nursing home spouse.  The prior maximum amount allowed was $109,560.

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Increase in Nursing Home Costs

Friday, December 30th, 2011 Adam Roa

According to the newly published survey by Metlife, the average cost of long term care continues to rise.  According to the report the average room nursing home rates rose nationwide by 4.4 percent to $87,235 a year or $239 a day, while assisted living facility costs jumped 5.6 percent on average to $41,724 a year or $3,477 a month.

According to the Metlife survey, Baltimore area nursing homes ranged in monthly costs (for a semi private room) from $6,944 to $9,424 a month.  The Baltimore area average assisted living costs grew to $3,830 a month.    The Baltimore area average home health aide charged $19/hour.

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Nursing Services and Medical Assistance

Tuesday, December 13th, 2011 Adam Roa

From a Maryland perspective, once an individual is eligible for long term care Medical Assistance, all of his or her income must go to the nursing home except for certain deductions.  Notably, the deductions are health insurance,  personal needs allowance (currently at $71/month), and possibly a spousal allowance.   While there may be other needs for the nursing home resident, a question often poised is can the resident’s income be used to pay for private nurses?  The answer here in Maryland is “no.”   If private duty nurses or aids are going to be employed they must be paid for by other resources, typically, the surviving spouse or other family members.

So, it came as no surprise that in a recent out-of-state case, that this court also held that private nurse costs could not be deducted from the nursing home resident’s income (once they were on Medicaid).  In Re Pitman v. Daines (N.Y. Sup. Ct., App., Div., No. 2011 NY Slip Op 08681, Dec. 1, 2011).  In that case, the nursing home resident paid for private nurses to provide 24-hour care. After the resident died, the resident’s executor sought to have the decedent’s net available monthly income reduced for Medicaid eligibility purposes by the amount the decedent paid for
the nurses, but the state refused.

After a hearing, New York State Department of Health found for the state, and the executor appealed.

The New York Supreme Court, Appellate Division, held that the amount the resident paid for private nurses could not be subtracted from his monthly income for Medicaid eligibility purposes. According to the court, “private 24-hour nursing care may have provided the deceased with ‘optimal care’ but was not ‘essential’ care that was ‘medically necessary’ for purposes of Medicaid reimbursement.”

If this same case were heard here in Maryland, it is my opinion that the court here would come to the same conclusion.

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Medical Expense Deduction

Tuesday, August 2nd, 2011 Adam Roa

Recent Tax Court Decision Clarifies When Long-Term Care Expenses are Deductible

There is no question that long-term care can be very expensive (both assisted living and nursing home level of care).   However, many of these long-term care expenses can be deducted the parent’s income tax return as a medical expense deduction.   A recent U.S. Tax Court recently ruled on whether or not non-medical caregiving expenses are deductable for non-medical personnel. 

In the Estate of Lillian Baral (U.S. Tax Ct., No. 3618-10, July 5, 2011), Lillian Baral suffered from dementia and her doctor recommended that she get 24-hour-a-day care.  Ms. Baral’s brother hired caregivers to assist Ms. Baral with her daily activities.  On her income tax return Ms. Baral included, as a medical expense deduction, the payments made to the caregivers.   The IRS said the expenses were not deductable.   Following Ms. Baral’s passing, her estate appealed the IRS determination to the U.S. Tax Court.

The Internal Revenue Code provides that expenses for medical care may be claimed as an itemized deduction if they exceed 7.5% of adjusted gross income (this will increase to 10% of adjusted gross income in 2012).   The definition of allowable medical expenses includes the cost of long-term care if a doctor has determined the parent is chronically ill.  Chronically ill is defined as needed help with such basic activities as eating, going to the bathroom, dressing, or requiring substantial supervision due to a sever cognitive impairment. 

In this case, the Tax Court agreed that the payments Ms. Baral made for caregivers for assisting and supervising her were deductible medical expenses.  The expenses qualified as long-term care services even though the caregivers were not medical personal since a physician found that the services provided to her were necessary due to her condition. 

The issue of whether caregiving expenses are deductable as a medical expenses is a tricky area, but one that is worth exploring as the potential income tax savings may be substantial.  Remember, the medical expense deduction may be available in both the nursing home as well as assisted living context.   Please seek legal counsel for more detailed information.

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Medical Assistance Recovery of Transferred Assets

Friday, May 20th, 2011 Adam Roa

 

What is cited below is another jurisdictional case which illustrates the limits of what a State may do to accomplish a Medical Assistance (i.e. Medicaid) recovery on community spouses’ assets.  In this case, an attempt was made to put a Medicaid lien on the estate of a recently deceased community spouse at a time when the nursing home spouse continued to receive Medicaid benefits.  In this case the court ruled that the State was prohibited from reaching into the spouses’ estate for recovery. 

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An Idaho district court rules that the state cannot recover assets from the estate of a Medicaid recipient’s spouse that were transferred to the spouse before the Medicaid recipient died. In Re: Estate of Perry (Idaho Dist. Ct., 4th Dist., No. CV-IE-2009-05214, March 16, 2011).

Martha and George Perry owned property together. Mrs. Perry entered a nursing home, and Mr. Perry transferred the property into his name. Mrs. Perry then began receiving Medicaid benefits. Mr. Perry died before Mrs. Perry, and the property was sold. After Mr. Perry’s death, the state filed a claim against his estate seeking recovery of more than $100,000 in Medicaid benefits it had so far paid on Mrs. Perry’s behalf.

The state asserted that, because Mrs. Perry previously had an interest in the property during the marriage, the state could recover an amount equal to her ownership interest. The estate’s personal representative countered that the state was entitled only to recover an amount equal to Mrs. Perry’s interest in the home at the time of her death. Because Mrs. Perry was still alive at the time of the transfer, the personal representative argued the state could not recover any amount. The magistrate ruled that the state’s ability to recover costs was limited to assets that were transferred to the recipient’s spouse at death, not to inter vivos transfers. The state appealed. (Mrs. Perry died while the appeal was pending.)

The Idaho District Court affirms, holding the definition of “estate” in federal Medicaid law does not permit the state to recover property interests the Medicaid recipient divested before death. The court determines that there is a conflict between state and federal law because state law would allow the state to recover from the spouse’s estate so long as the property was once community property, but the court concludes that federal law preempts state law.

from www.elderlawanswers.com

 

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Medical Assistance Update

Monday, May 9th, 2011 Adam Roa

FIA Transmittal 11-26

The Department of Human Resources just released an update changing the document requirements for a Medical Assistance application.  The changes for what is required in the initial application is a profound change in terms of the financial statement documentation that is initially needed.  Instead of a full five years worth of documentation, what would be needed initially is a snap shot of statements covereing the eligiblity month and then the previous years statements but only for the anniversary month (i.e. if you are seeking eligiblity for July 2011, then you would need financial statements for July 2010, July 2009, July 2008, July 2007, and July 2006).   However, an additional item that will be needed are tax returns for the previous five years.   These new provisions take effect for all applications beginning May 1, 2011.

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POA Breach of Fiduciary Duty Makes Her Liable to Nursing Home

Friday, April 29th, 2011 Adam Roa

There is no question that a financial power of attorney holds what is called a “fiduciary duty” to act in the best interests of the grantor.   But what if that power of attorney holder breaches that duty and takes “mom’s” funds for herself?  What if her taking of mom’s funds caused mom to be disqualified from Medical Assistance (i.e. Medicaid)?  Can she be found liable? 

An interested case in Indiana answered that quesion in the affirmative.

An Indiana appeals court rules that a woman breached her fiduciary duty to her mother when, among other things, she refused to cash out a life insurance policy in order to qualify her mother for Medicaid and later profited from the policy. Shaw v. Covenant Care Waldron Home (Ind. Ct. App., No. 73A04-1005-SC-317, March 2, 2011) (unpublished).

Joni Shaw admitted her mother to a nursing home. Ms. Shaw signed the admission agreement on behalf of her mother as her attorney-in-fact. Ms. Shaw applied for Medicaid on her mother’s behalf, but the application was denied due to a life insurance policy. Ms. Shaw refused to cash out the policy, and the Medicaid application was never approved. In addition, Ms. Shaw withdrew funds from her mother’s account and deposited them into her sole account. After her mother died, her brother, who was the beneficiary of the life insurance policy, gave her $8,000 from the proceeds of the policy.

The nursing home had an outstanding balance of $5,709.40, which Ms. Shaw refused to pay. The nursing home sued, alleging breach of contract and breach of fiduciary duty. It argued that an attorney-in-fact who breaches a duty to the principal is liable to third parties as though he or she were the principal. The small claims court found in favor of the nursing home, and Ms. Shaw appealed.

The Indiana Court of Appeals affirms, holding that Ms. Shaw breached her fiduciary duty to her mother. According to the court, because Ms. Shaw profited from refusing to cash in the life insurance policy and she transferred funds from her mother’s account to her own account, it was clear that Ms. Shaw was acting in her own self-interest to the detriment of her mother.

from www.elderlawanswers.com.

The interesting question from a Maryland point of view is what right does the nursing home have to sue the attorney-in-fact.  Can other interested family member’s sue on behalf of mom?  The answer to that question is “yes.”  However, court action will need to be started to give that family member standing to recover the stolen assets.

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New Estate Tax and Gift Tax Rules

Friday, January 7th, 2011 Adam Roa

Congress passed and President Obama has signed into law the deal extending the Bush tax cuts that he struck with Congressional Republicans. The legislation restores the estate tax for two years at a 35 percent tax rate, with estates up to $5 million exempt from paying any tax ($10 million for couples). If Congress does not change the law in the interim, in 2013 the estate tax will revert to what it was scheduled to be in 2011 — a 55 percent rate and a $1 million exemption.

The new $5 million estate tax exemption and 35 percent rate are retroactive to January 1, 2010. The heirs of those dying in 2010 will have a choice between applying the new rules or electing to be covered under the rules that have applied in 2010 — no estate tax but only a limited step-up in the cost basis of inherited assets. This will benefit the heirs of tens of thousands who died in 2010 with relatively modest estates and who would have been subject to capital gains tax on inherited assets above a certain threshold.

The law makes the estate tax exemption “portable” between spouses. This means that if the first spouse to die does not use all of his or her $5 million exemption, the estate of the surviving spouse could use it.

The law unifies the estate, gift and generation-skipping transfer tax exemptions at $5 million. (For 2010 there is no generation-skipping tax, while the gift tax exemption has been $1 million for a number of years.) A 35 percent tax rate will apply to gifts or transfers over the $5 million threshold. (There is no change in the $13,000 annual exclusion amount for gifts.)

from www.elderlawansers.com.

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Asset Transfer Does Not Trigger Penalty

Wednesday, December 15th, 2010 Adam Roa

Normally, for every $6,800 transferred out of a Medical Assistant’s name or their spouse, it will result in a penalty of one month of ineligibility.  However, a frequent question is what happens if my parent transferred funds when they were healthy but during the five year look back period? 

 Maryland case law on this is silent.  However, a New Jersey case highlights, at least in New Jersey, how the court ruled in favor of the applicant with a $100,000 transfer.

“A New Jersey administrative law judge finds that a Medicaid applicant who was healthy at the time he transferred funds to his daughter transferred the funds for a reason other than to qualify for Medicaid. R.C. v. Division of Medical Assistance and Health Services and Hudson County Board of Social Services (N.J. Office of Administrative Law, Hudson County, OAL DKT. NO. HMA 08047-10, Oct. 22, 2010).

 While R.C. was healthy he transferred $100,000 to his daughter to help with her financial problems. A year later, R.C. suffered a stroke and his health began to deteriorate. He was eventually admitted to a nursing home.

 R.C. applied for Medicaid benefits. The state denied benefits, finding that R.C. had made an uncompensated transfer of assets to his daughter. R.C. requested a hearing.

The administrative law judge (ALJ) reverses, finding that the transfer was made exclusively for a purpose other than establishing Medicaid eligibility. The ALJ concludes that because R.C. was employed and in good health when the transfer occurred and the stroke was unexpected, R.C. provided convincing evidence that he did not transfer the money in order to qualify for Medicaid.” From Elderlawanswer.com.

Federal law and the Maryland Medical Assistance Manual allow this exception.  However, in practical terms, there is a huge gray area concerning which facts fit within this exception.  If this exception were to be utilized in a Maryland Medical Assistance application, expect the application to be denied and the issue to be decided on appeal.

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New Medicare Premiums, Deductibles, and Co-Pay Charges for 2011

Friday, November 12th, 2010 Adam Roa

The basic premium for Medicare Part B will be $115.40 a month in 2011, up from $110.50 in 2010 (a 4.4 percent increase). But because there will be no cost of living benefit increase for Social Security recipients for 2011, most beneficiaries will be exempted from paying this increase and will instead pay the same $96.40 premium amount they have paid since 2008.

A “hold-harmless” provision in the Medicare law prohibits Part B premiums from rising more than that year’s cost of living increase in Social Security benefits. Since there is no Social Security increase, most beneficiaries — about 73 percent — will not have to pay any increased Part B premiums because of the hold-harmless provision. Those covered by the provision will continue to pay Part B premiums of $96.40 per month in 2011.

But this hold-harmless protection does not apply to the other 27 percent of beneficiaries — about 12 million in all — who either:

  • do not have their Part B premiums withheld from their Social Security checks, or
  • pay a higher Part B premium surcharge based on high income (see below), or
  • Individuals with annual incomes between $85,000 and $107,000 and married couples with annual incomes between $170,000 and $214,000 will pay a monthly premium of $161.50. 
  • Individuals with annual incomes between $107,000 and $160,000 and married couples with annual incomes between $214,000 and $320,000 will pay a monthly premium of $230.70.
  •  Individuals with annual incomes between $160,000 and $214,000 and married couples with annual incomes between $320,000 and $428,000 will pay a monthly premium of $299.90.
  •  Individuals with annual incomes of $214,000 or more and married couples with annual incomes of $428,000 or more will pay a monthly premium of $369.10.
  • Those with incomes between $85,000 and $129,000 will pay a monthly premium of $299.90.
  • Those with incomes greater than $129,000 will pay a monthly premium of $369.10.

The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary’s premiums. So the income reported on a beneficiary’s 2009 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2011. Income is calculated by taking a beneficiary’s adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If a beneficiary’s MAGI decreased significantly in the past two years, she may request that information from more recent years be used to calculate the premium.

As directed by the 2003 Medicare law, higher-income beneficiaries will pay higher Part B premiums. Following are those amounts for 2011:

  • Rates differ for beneficiaries who are married but file a separate tax return from their spouse:
  •  Basic Part B premium: $115.40/month
  • Part B deductible: $162 (was $155)
  • Part A deductible: $1,132 (was $1,100)
  • Co-payment for hospital stay days 61-90: $283/day (was $275)
  • Co-payment for hospital stay days 91 and beyond: $566/day (was $550)
  • Skilled nursing facility co-payment, days 21-100: $141.50/day (was $137.50)

 

 All Medicare beneficiaries will be subject to the new deductibles and co-payments. Medicare Part B covers physician services as well as qualifying out-patient hospital care, durable medical equipment, and certain home health services, among other services.

Source: from www.elderlawanswers.com

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